Nvidia reports problem with laptop chips

Problem found in packaging material of chips, plus thermal design of some laptops

By Agam Shah

July 3, 2008 12:00 PM ET

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IDG News Service - Nvidia Corp. has uncovered a problem with some older graphics chips that shipped in "significant quantities" of laptop PCs, the company said yesterday.

Nvidia hasn't determined the cause of the problem but said it relates to a packaging material used with some of its chips, as well as the thermal design of some laptops. Modern processors generate considerable amounts of heat.

To tackle the problem, the company is releasing a software driver that will cause system fans to start operating sooner and reduce the "thermal stress" on the chips. The driver has been provided to laptop makers directly, said Derek Perez, a spokesman for Nvidia.

Nvidia will take a charge against second-quarter earnings of $150 million to $200 million to cover the expected cost of repairing and replacing the products, which include graphics processing units and media and communications processors. It didn't say which of its products were affected.

The products have been failing in the field at "higher than normal rates," Nvidia said. In a filing with the U.S. Securities and Exchange Commission, the company said it was talking to its supply chain about getting reimbursed for some of the costs.

The company also had other bad news on Wednesday. It said it was lowering its revenue forecast for the second quarter because of pricing pressure and delayed product ramps. The company now expects revenue to be between $875 million and $950 million.

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